The tribunal observed that "a question may arise regarding a purport of the amendment of Section 154 of the I-T Act vesting the income-tax authorities to amend an intimation issued under Section 143(1). In our view, this power of amendment would be confined to only rectification of the tax calculations or interest calculations. For the reasons discussed above, we hold that the assessing officer had no power to withdraw the rebate claimed by the assessee by invoking the provision of Section 154 of the Income-tax Act. Therefore, the impugned order under Section 154 is cancelled."

TDS

Where the assessee fails to deduct tax at source or after deduction fails to pay, then interest under Section 201(1A) is mandatory (Kanoi Industries P Ltd v. Asst CIT (2003) 261 ITR 488 Cal.).

Where the recipient of income has paid tax (by way of advance tax or self- assessment tax) then the payer of income cannot be subjected to interest under Section 201(1A) for the failure to deduct tax at source (CIT vs Rishkesh Apartments Co-operative Housing Society Ltd — 2002 253 ITR 310 Guj.).

Penalty

Where the assessee has taken loan in contravention of the provisions of Section 269 SS, the discretion not to levy penalty under Section 273 B can be invoked if there was sufficient cause for non-compliance of the statutory provision. Where the loan transaction is genuine and was for immediate necessity then penalty is not leviable (CIT vs Bhagwati Prasad Bajoria — HUF 2003 263 ITR 487 Gau.).

The calculation of penalty is on the amount exceeding Rs 20,000 and the entire sum so obtained in contravention of the provisions of Section 269 SS is not to be taken as penalty (CIT vs Ajanta Dyeing and Printing Mills — 2003) 264 ITR 505 Raj.).

Where there is no finding that there was cash loan, penalty cannot be imposed (CIT vs Noida Toll Bridge Co Ltd — 2003 262 ITR 260 Del.).

Where the assessee offers an explanation, the AO has to consider the explanation of the assessee before levy of penalty (CIT vs G. R. Rajendran — 2003 259 ITR 109 Mad.).

Where the assessee does not file the return within the "due date" mentioned under Section 139 (1), then such assessee can be subjected to the consequences of Section 276 CC (Prakash Nath Khanna vs CIT — 2004 266 ITR 1 SC).

In Shanbhag Restaurant vs Dy. CIT (2004 266 ITR 393 Kar.) it was held that where the order of assessment is made in February 1994 and the penalty proceedings are initiated in June 1994, the time limit for levy of penalty would be six months from the date of the order of assessment and delayed initiation of penal proceedings would not extend the time limit for levy of penalty.

If the AO does not record the satisfaction of the concealment of income before issue of notice or before initiating penal proceedings, then such proceeding is not valid. The condition precedent for levy of penalty are: i) the AO has to form opinion and record his satisfaction before initiation of penal proceedings; ii) if the assessment order does not contain the satisfaction as warranted by Section 271 for initiating the penalty proceedings, then the penalty proceedings would become invalid (CIT vs Super Metal Re-rollers — 2004 265 ITR 82 Del.).

Where the assessee agrees for the alleged suppression in sales and merely the sale or gross turnover is estimated at above Rs 40 lakh, penalty under Section 271B for failure to get the accounts audited cannot be levied. (Brijlal Goyal vs Asst. CIT — 2004 88 ITD 413 Del.).

Where the AO issues a notice for levy of penalty, and the notice does not contain the signature of the AO, then the notice would be invalid and not defective. The penal proceedings, hence, cannot be sustained (CIT vs Aparna Agency Pvt Ltd — 2004 267 ITR 50 Cal.).

Disallowance of expenditure could not be treated as furnishing of inaccurate particulars of income. Similarly, addition based on estimate and disallowance of expenditure cannot be a reason for levy of penalty under Section 271(1)(c) (CIT vs Ajaib Singh & Co — 2002 253 ITR 630 P&H).

(Edited extracts from a paper presented at the CPE seminar on taxation held recently in Chennai.)

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